Tax increases on the rental sector are leaving young people unable to access the homes they need, an industry body claims.
The Residential Landlord Association’s research wing, PEARL, has surveyed almost 3,300 landlords, of which 69 per cent said that the decision to impose a three per cent stamp duty levy on the purchase of new homes to rent in 2016 is putting them off investing in further rental property.
The findings show also that just 18 per cent of the landlords responding to the survey have purchased at least one property in the last 12 months, down nine percentage points compared to the same time last year.
With recent figures from the Institute for Fiscal Studies showing that young adults are “significantly less likely to own a home at a given age than those born only five or 10 years earlier”, the RLA claims that the results show that young people now face a perfect housing storm, unable to afford a home of their own, whilst investment in new homes to rent stalls.
It adds that although government ministers have sought to boost support for corporate investment in the private rental market, just two per cent of all private rented households in the UK are Build To Rent properties.
With the vast majority of landlords being individuals, the RLA is calling for urgent measures to address the housing crisis which continues to get worse.
It wants this to include “at the very least” scrapping the three per cent stamp duty levy where a landlord is prepared to invest in property adding to the net supply of housing. This could include new build, office conversion, bringing empty homes into use or sub-dividing existing large homes into separate dwellings.
The RLA is calling also on the government to think more creatively about the use of taxation, including providing Capital Gains Tax relief for landlords prepared to sell a property to a sitting tenant.
This could form the basis of a new model, encouraging landlords to invest in new rental property, to sell it to their tenant after a set period and for the landlord then to repeat the process.
“Young people are now facing the full force of the housing crisis. Unable to buy a home of their own and with the supply of homes not increasing to meet rising demand, current tax policy is forcing many young adults to rely on their parents for a place to live” claims RLA policy director David Smith.
“It is time for the Treasury to think more creatively and use taxation to encourage and support landlords ready, and prepared to invest in the new homes to rent we desperately need. Without change we will still be talking of a housing crisis for years to come” he adds.